UK Boosts Support For Offshore Wind in Bumper Auction

Offshore wind turbines near Great Yarmouth, UK. Photo by Chris Ratcliffe /Bloomberg

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(Bloomberg) — Britain stepped up support for offshore wind farms despite rising prices, as it races to meet an ambitious 2030 clean-power goal.

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The UK awarded contracts totaling a record 8.2 gigawatts to offshore wind farms at a price of £65.45 ($88) per megawatt-hour to companies including SSE plc and RWE AG. The price for offshore wind in the auction known as AR7, was more than the £58.87/MWh in last year’s auction, because of rising supply chain costs.

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The government has an ambitious target of having a mostly decarbonized power system by 2030 on the way to reaching net zero by 2040. That would mean at least 43 gigawatts of offshore wind by the end of the decade. The cost of building the new capacity is ultimately paid for by consumers, creating a difficult balancing act for Prime Minister Keir Starmer, who has pledged to cut household bills during the current parliament.

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“With these results, Britain is taking back control of our energy sovereignty,” said Energy Secretary, Ed Miliband in a statement. The results deliver the biggest single procurement of offshore wind energy in British and European history, according to the statement.

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The results today take the government closer to its 2030 target. It now needs to procure around 7 gigawatts of new capacity in next year’s auction, which will be the last realistic chance to meet the goal. 

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The original budget for fixed bottom offshore wind was set at £900 million but it was increased to almost £1.8 billion under new rules that allow the government to choose extra projects if they were deemed good value for consumers.

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The government says investing in renewables and moving away from a gas-based power system will ultimately lower electricity costs, even as the high upfront expense of building wind farms is passed on to consumers.

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While the UK has long been a leader in offshore wind and climate policies, both have become increasingly politicized, particularly after US President Donald Trump rolled back support for renewable projects in the US, a shift that has weighed on the operations of several European developers there.

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During a visit to Scotland last year, Trump reiterated his opposition to wind farms, especially projects proposed off the coast near his golf courses. While Scotland is seeking to pivot from its oil-dependent past to become a global leader in wind energy, Trump instead described Aberdeen as the “oil capital of Europe” and urged further expansion of the sector.

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“The results of the government’s offshore and floating offshore wind auction represent a significant step forward in delivering the UK’s evolution to clean energy,” said James Alexander, chief executive officer of the UK Sustainable Investment and Finance Association.

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